LANXESS – Leading Supplier of Specialty Elastomers for the Automotive Industry

Stephen Brice LANXESS – Business Unit Technical Rubber Products Mobility Days November 22, 2012, Prague, Czech Republic

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Content

  LANXESS portfolio of Technical Rubber Products for automotive

  Introduction of Technical Rubber Products

-  Main headlines by product

-  Importance of automotive

-  Examples of automotive applications

 Conclusions

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LANXESS offers by far the broadest portfolio of synthetic rubbers for the automotive industry

Tire Supplier

Technical Rubber Products SBR BR IIR EPDM CR NBR HNBR AEM ACM EVM CSM FKM ECO

LANXESS TRP is investing and innovating in all of its product lines

KKPC

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ASTM classification – Temperature versus oil swell

Oil swelling IRM 903 (vol.%)

Tem

pera

ture

resi

stan

ce (º

C)

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Introduction NBR – Specialty rubber of acrylonitrile and butadiene

  LANXESS -  Global market leader

  Unique property -  Oil resistance

  Market volume -  ~ 500 kt (2010)

  Average market increase -  ~3% per year

Penetration time [days] 0 7 14 21

50 100 150 200 250 300

NBR CR SBR

NR

Cha

nge

of w

eigh

t [%

]

Comparison of penetration time Main product: NBR-bales

Krynac®: Flooring Shanghai airport Perbunan®: Seals in pharma

LANXESS TRP invested via JV $ 50 million in NBR; producing 30 kt of NBR in China, effective H2-2012

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Automotive end uses represent ~ 50% of the total NBR consumption

  NBR provides superior resistance to degradation by oil and fuels

  Automotive main segment, but also construction , food and pharma

  LXS offers full range of NBR, so also NBR specialities:

  Krynac: extremly high oil resistance grades: 4450 / 4975

  Krynac X: for apron and cots

  Perbunan CHM: Clean High Modulus for injection moulding

  Baymod N: for friction and plastic modification

  LXS worldwide biggest NBR site in France offers all NBR technologies to design NBR customer solutions

NBR - Global Demand by Industries and Segments

Automotive

Machinery

Plastic Mod.

Aprons & Cots

Wires & Cables Others

Construction

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Introduction HNBR

HNBR properties   LANXESS universal high performance rubber with

-  Optimized processing -  Increased product quality -  Broader functionality window

  Continuously growing range of applications   LANXESS is expanding capacity for

-  Belts, Sealants and Gaskets -  Cable and Hoses -  Diaphragms, Rolls -  Oil drill parts and High temperature applications

LANXESS TRP invested in 40% expansion of HNBR capacity, to support its continued growth in HNBR sales. Expansion is effective H2-2012

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  In automotive safety parts – brakes   Preferred material Baymod NXL 3843

Key requirements   product:

-  Flexibility -  Compactness -  Friction coefficient -  Noise -  Heat resistance

  process: -  powder material preferred -  dry mixing + sintering process

Automotive applications of LANXESS NBR NBR powder in friction - examples

Clutch disc

Brake pads

Brake linings

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Typical grades

 Krynac® 4450

 Perbunan® 3945

 Therban® 4307 and 8505

Automotive applications of LANXESS NBR / HNBR Seals Examples (incl. oil filter and shock absorber seals)

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Typical grades

 Perbunan® 1846 (brake)

 Perbunan® 2845 (hydraulic / fluid hoses)

 Therban® 3406 (hydraulic / power steering)

Brake hoses

Hydraulic hoses

Automotive applications of LANXESS NBR / HNBR Hoses – Examples

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Transmission belts

HNBR Therban® – Typical automotive applications

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Dampers / Isolaters

HNBR Therban® – Typical automotive applications

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Introduction CR – Specialty rubber of chloroprene

CR properties and global demand

  Lanxess -  market leader EMEA and global no 2 position

  Unique properties -  Low permeability, excellent fatigue resistance

  Further properties -  Low-temperature flexibility, adhesion to

reinforcements   Market volume

~300-350 kt (2010)   Average market increase:

~3-4% per year

LANXESS TRP investing € 17 million in 10 % expansion of its capacity, incl. implementation of new production technology, becoming effective in 2013

Product: 25 kg CR-bags

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  Polychloroprene is produced in a variety of grades in both dry and latex forms

  Dry grades of CR are normally used in industrial and automotive rubber goods such as axle boots, air springs, hoses and belts

  Latex grades of CR are used in waterborne adhesives and dipped goods, such as gloves and CVJ (constant velocity joint) boots

CR - Global Demand by Industries and Segments

Adhesives

Construction

Latex

Automotive

Others

Wire& Cables

Rubber Products

Automotive sector represents ~25% of global CR consumption

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Baypren® CR – Typical applications

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Introduction EVM

EVM properties   LANXESS’ unique high performance material

(> 40% VA)   EVM provides among others

-  Excellent Flame Retardant Non Corrosive properties

-  UV and Ozone resistance   LANXESS is expanding capacity to follow growth in;

-  Cable isolation -  Construction & Protective Films -  Automotive seals -  Plasticiser, Modifier of e.g. CR, EPDM, HNBR -  Shoes, Translucent rubber, (Hot melt) Adhesives

LANXESS TRP is investing € 9 million in expansion of EVM capacity to support continued growth in EVM sales, effective H2-2012

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LANXESS EVM – Typical applications

Rocker box cover seal

ABS cable Fuel hose cover

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EPDM properties & global demand

  Lanxess   global market leader

 Unique property

-  Very good outdoor properties

 Further property -  Easy processabilty

 Market volume: ~1,100 kt (2010)

 Average market increase: ~4-5% per year

Product: 25 kg bales, pellets

Comparison of properties

LANXESS TRP is investing > € 500 million in EPDM via acquisition of Keltan® EPDM, implementation of ACE™ EPDM technology on its largest EPDM line in Netherlands and a new worldscale plant in China.

Introduction EPDM – The versatile elastomer

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The EPDM market depends mostly on the automotive industry

  Consumption of EPDM in automotive applications is the major use for EP elastomers accounting for approximately 45-55% of global demand

  EP elastomers are used for various body & chassis parts, radiator & heater hoses, door & window weatherstripping

  The growth of EP elastomers depends on the growth of the automotive industry as a whole

EPDM Global Demand by Industries and Segments

Polymer Mod

Construction

Automotive

Oil additive

Appliances Wire & Cable

Rubber Products

Others

* Polymer Mod and oil additives also mostly for automotive applications

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Solid and sponge sealing systems

Engine mounts

Solid and sponge sealing systems (60-65% of automotive volume)

Wipers and belts (5% of automotive volume)

Wipers

Hoses (10% of automotive volume)

Radiator hose

Airco hose Brake hose

Source: Company estimates

Keltan® EPDM – Typical automotive applications

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Keltan® – LANXESS’ high-performance rubber

  From January 1, 2012, LANXESS has one brand name for all LANXESS high-performance rubber EPDM: KELTAN®

  LANXESS will have one KELTAN® EPDM portfolio and coding, streamlined but matching your requirements today and in the future.

  LANXESS will convert its biggest production line in Geleen, The Netherlands, to its innovative KELTAN® ACE™ technology

  LANXESS will build a large EPDM Plant in China based on Keltan® ACE technology.

KELTAN® – The leading EPDM brand

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Keltan® Eco – First commercially available bio-based EPDM

Benefits   Reduced dependence on fossil resources   Reduced carbon footprint due to sugar cane   Lower energy footprint than traditional EPDM   Truly sustainable & validated by Life Cycle Assessment   Bio-based content can be measured by ASTM D6866 Carbon-14 test

First achievements   Keltan® Eco made in Brazil last year > 67% bio-based   No compromise on quality   Positive response in the market   Testing at customers is ongoing

Keltan® Eco helps our customers to produce "greener" products

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Tailored solutions for versatile application opportunities

Focus on  Specialty high-end applications  Partners with sustainability on agenda  Green applications  Applications visible to end consumer

Application opportunities  Bio-based, flexible, elastic, heat stable, weather resistant,

durable, great surface aesthetics  Moldable, mixable, extrudable, compatible with other

synthetic rubbers

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Looking for picture of a car with reference to various rubber parts & type of rubber

Konzernforschung / Markenlabor Volkswagen

Synthetic elastomers in automotive – thus more then tires

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Tire Supplier

Technical Rubber Products SBR BR IIR EPDM CR NBR HNBR AEM ACM EVM CSM FKM ECO

LANXESS is investing and innovating in all of its product lines

KKPC

LANXESS BU-TRP will split into KEL (EPDM) and HPE (CR, NBR, HNBR/EVM) to develop both businesses

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LANXESS – your partner of choice for automotive industry

  LANXESS is very committed to grow & build its specialty synthetic rubber products for automotive applications

-  Acquisition of KELTAN® EPDM, KELTAN® Eco, investments in innovative ACE technology.

-  Debottlenecking of CR, HNBR and EVM capacities.

-  New production of NBR in China.

-  Construction of a new large EPDM plant in China based on ACE technology

Conclusions

LANXESS has thus broadest portfolio of technical elastomers for automotive and would like to be the supplier and development partner of choice for you

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